CW500: Retailers jostling for position in world’s biggest shop window

Consumers are beginning their shopping journeys online and increasingly finishing them there
too.

Not many industry sectors have avoided being shaken up by the web, but arguably the most shaken
has been retail.

There is online-only retail, multi-channel and now omni-channel retail and you will struggle to
find a high-street brand that is not increasing online sales by percentages not seen since the dawn
of the first glass-fronted stores arrived.

This is both an opportunity and a threat. Today retailers must invest heavily in technology to
ensure they can serve customers right through the buying journey. They must at least be as good as
their competitors in a world where customer loyalty means less and less. If a retailer does not
connect to a consumer on his or her buying journey it doesn’t have a chance of making a sale, even
if it had the best product at the best price.

A recent CW500 Club event on Retail IT:
The high street vs the internet and the lessons for other sectors, brought together three IT
leaders from very different organisations to share their ideas and experiences within retail
IT.

They agreed that a straightforward IT implementation will not sort out your online sales
strategy. And it is not even your own salespeople that are influencing sales. It’s about having the
best technology, user experience and managing the online image.

Businesses must ensure they are seen in a good light in the virtual world as social media has
changed how people get advice about everything. In the past you might ask a friend if a product is
good, but today you have millions of “friends” online telling you what is good.

IT departments have changed too. They must now use agile development techniques to have apps up
and running quickly and not be afraid of every small iteration working perfectly first time, rather
they should be able to test things out and fix bugs quickly.

He said almost everything can be bought online these days and it is becoming more and more the
norm for consumers to buy a broader range of goods and services: “The only thing I don’t buy online
is diesel and that’s because they won’t deliver.”

Benson, who has worked in retail IT for 12 years, said IT departments must react quickly to the
changing demands of consumers. “The pace of change is now more relentless – people in IT feel the
pressure of pace all the time,” he said.

He said technology is evolving at such a pace in retail IT: “Technology changes so regularly
there is no longer expertise in technologies.”

As a result of the pressure on IT teams, CIOs must find ways to motivate staff, said Benson: “As
IT leaders we have to go more into leadership than management. You need to capture hearts not
heads. Make people believe in what they are doing so they go the extra mile.”

And the methods used by IT developers must also change. He said developers cannot analyse
everything and must trust their instinct: “If it feels right it probably is. Pick a route quickly
but put checks and balances so you can stop quickly if it is not working.”

He added: “People flog a dead horse for far too long. If it is wrong you should can it and move
on. You will still have time to get to market.”

He said the focus should be on agile software development. “Make projects quick and iterative
and don’t go for perfection – get something to market quickly and refine it,” said Benson. He said,
when asked by business for developments, IT departments should have the attitude, “we can if...”
rather than “we can’t.”

A different breed of CIO

CIOs in retail are a bit different these days. Mariano Albera, CIO at Thomas Cook, is at heart a
software developer, he said. He is one of two CIOs at Thomas Cook. He concentrates on the
customer-facing IT while a colleague is the CIO in charge of the traditional IT infrastructure.

Working in the travel sector, which has also been disrupted by the internet, for a large
supplier has been a change for Albera. He was used to smaller companies and startups. “To be honest
I am just a software developer who has worked in retail my entire career,” he told the CW500
Club.

He said big companies can learn a lot from startups and their development product methods: “I am
an agile software developer and have been doing it all my life and I deliver software quickly.”

He said processes like steering committees at big businesses are not really relevant when things
change so much: “The customer is the steering committee. It is about the customer telling you what
they want by the way they use.

“Be pragmatic and be very fast. Don’t focus on five-year roadmaps. Focus on small deliverables,”
said Albera.

Once the IT department has convinced the business that it needs to develop quickly it then has
the challenge of doing it. “Competitors are moving quickly and the customer is connected to
everybody through the same browser,” said Albera.

His team are not only focused on online sales because, unlike MandM Direct, Thomas Cook still
has a bricks-and-mortar presence. This multi-channel operating model brings advantages and
challenges.

Like Thomas Cook, John Lewis is multi-channel or omni-channel, according to Sarah Venning, head
of IT relationships at John Lewis.

She said consumers do not really see online and high-street shopping differently: “They see
brands and they buy in different ways. They want to interact with exciting retailers or just
transact with them if they want to do it quickly,” she said. John Lewis’s website is now 12 years
old and 25% of all sales are made online.

Venning’s role sees her sit between IT and the business and she said that in the retail sector
the last few years has seen these two parts of the organisation work closer together than ever.

“Retail technology is in a totally different place now to where it was 10 years ago when it was
seen as a necessary evil and as little was spent on it as possible and IT were the backroom boys,”
she said.

“But today IT is the strategic differentiator in retail. The business as a whole has had to
become a lot more tech savvy, partly because of the consumerisation of IT.”

She said consumerisation is a great opportunity but it brings with it the challenge of managing
the expectations of the business, because people in the business use technology and expect the IT
department to be able to do everything.

John Lewis is a large company with the IT infrastructure to match, but its legacy brings
significant IT challenges. The combination of the need to develop IT to meet customer demands
quickly and support the legacy core IT means the John
Lewis IT team has to work at different speeds in tandem, said Venning.

Customer-facing systems can be developed quickly and simply but when you have to link to lots of
other core systems it can be difficult. “Unless we can develop at multiple speeds we are dead in
the water,” she said.

“We need to continue to invest in major systems of record underpinning core business, such as
financial reconciliation, supply chain, and customer data systems.” These are the slower
developments that IT does. “But if we continued just doing this kind of development we would be
dead in the water.”

The second speed is developing systems to meet customer demand, using agile methods: “We have
put a lot of effort in agile software development and delivery.” She said this has involved John
Lewis’ IT department “learning to fail fast.”

The third speed development method is around innovation, said Venning. This comes through
activities like crowdsourcing and hackathons, where John Lewis is calling on the brains of many
outside the IT department and not even within the organisation.

“The experts of the past are not necessarily the experts of the future," said Venning. “We need
to be flexible to do IT developments at multiple speeds.”

Retail has probably been more affected by IT developments than any other sector. The
consumerisation of IT has accelerated change in a sector that was already moving from bricks and
mortar to online. The biggest challenge facing retailers and their IT departments is being able to
offer customers what they want and how they want it, at least as quickly as the growing number of
competitors.

There is no end in sight for any retail IT department – just a continually changing landscape
with new technology and customer demands popping up on a daily basis. While this puts pressure on
IT professionals it is an exciting environment to work in.

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